Turnabouts in European and Asian economies, along with recent gains in the US, are raising hopes that the worldwide recession is drawing to a close. That's not to say the coast is clear.
The brightening outlook in Europe and Asia and the improvement in US credit markets and indicators reflect heavy government stimulus spending. Many analysts question whether the top economies can sustain recoveries after stimulus measures and easy-credit policies have run their course - and in the absence of significant new consumer spending, especially among Americans.
"It's not clear that these economies can continue to move forward without stimulus," said Mark Zandi, chief economist for Moody's Economy.com. "And that's in part why stock markets across the globe are nervous."
It will be difficult for other countries to pull out of recession until the US, still one-quarter of the world economy, starts growing, he said.
After a frightening free fall across Europe in late 2008, France and Germany, the continent's two largest economies, reported recently that they had grown slightly in the second quarter of 2009. Other major European countries reported they were still struggling but with generally improved figures over late 2008 and earlier this year.
China, Japan, Hong Kong, Singapore and South Korea have also reported rebounds as government stimulus efforts across the globe have begun to show results.
Russia, among the hardest hit of major economies
as oil prices slumped and many foreign investors fled the country,
appeared to be stabilizing.
Meanwhile, in the United States
, the Federal Reserve said the
world's largest economy appeared to be "leveling out" and many
economists see a second-half rebound.
It all adds up to an improving picture ahead of an economic
summit next month in Pittsburgh
of the world's top-20 industrial and
It is the third such meeting of all the major economic players,
after one convened by former president George W. Bush
in November in
Washington and one held earlier this year in London
. It is the first to
be held recently as economies appear to be improving.
But until American consumers begin spending again, and so long
as jobs are still being lost, the durability of any recovery is
questionable. Major retailers reported last week that US consumers were
continuing to rein in spending on all but basics.
Despite slight recent improvements in many US economic statistics, many consumers have not seen a change in their lives.
So many jobs have been lost - nearly seven million since the
recession began in December 2007 - that the unemployment rate will
remain high long after the economy begins to rebound.
Many out-of-work Americans have lost unemployment and severance
benefits and are depleting their savings. Others are saving more and
spending less, still shaken from the worst economic downturn since the
Great Depression of the 1930s.
"This is going to be the mother of all jobless recoveries,"
said Allen Sinai, chief global economist for Decision Economics, a
Japan, the world's second-largest economy, grew 0.9 percent in
the second quarter, or April to June, compared with the prior quarter
as export sales picked up after the country's deepest slump since World
War II, the Japanese government reported last week. It was the latest
major economy to report upbeat second-quarter results.
Japan's return to growth - thanks to a 6.3% uptick in exports
along with government stimulus measures - marked the end of a yearlong
But the development, along with recent news that other major
economies had resumed economic growth or were stabilizing, did not
impress investors as global stock markets sank and then zigzagged amid
fears by jittery international investors that the recoveries were not
In the US, the gross domestic product contracted at a 1% pace
in the April-June quarter, after plunging 6.4% in the January-March
quarter, the worst in 27 years, and falling by 5.4% in the fourth
quarter of 2008.
The latest statistics suggested the recession is in its final stages, and some economists believe it may have already ended.
Still, economists are mixed on the pace of recovery. Many barriers clearly stand in the way of a quick rebound.
Noting China's fast bounce - it posted more than 6% growth in
the first half of 2009 - Peter Morici
, a business economist at the
University of Maryland
and a critic of President Barack
economic recovery plans, said: "China has a $400 billion stimulus
package, and its economy is firing on all cylinders. President Obama
has an $800 billion stimulus, but prospects for the US economic
recovery are fragile."
Other economists are guardedly optimistic. And Lawrence
Summers, the top White House
economic adviser, predicts "a substantial
return to normalcy" in the coming months.
While acknowledging "we have a long way to go," he notes that
most forecasts for GDP growth in the second half of the year are now
"It is reasonable to say that we are in a very different place
than we were six months ago; that the sense of free-fall, of vertical
decline, has been contained," Summers told a recent economic forum.
Most economists and analysts seem to agree.